PAYMENTS TO HOSPITALS FOR SPINAL PROCEDURES

While the Chair of the Workers' Compensation Board is charged with establishing fee schedules for
most medical treatment received by individuals eligible for benefits under the Workers' Compensation
Law, Volunteer Firefighters' Benefit Law or Volunteer Ambulance Workers' Benefit Law, the Chair does
not establish the fee schedule for reimbursement for inpatient hospital services. Pursuant to Public
Health Law § 2807 (4) the Commissioner of Health must submit to the Chair a schedule of hospital
inpatient reimbursement rates computed in accordance with Public Health Law § 2807-c (1) for an
established rate period for payments pursuant to the Workers' Compensation Law, Volunteer Firefighters'
Benefit Law and Volunteer Ambulance Workers' Law. The reimbursement amounts to general hospitals,
pursuant to Public Health Law § 2807-c (1) (a) and (b-1), are case based payments per discharge for
each diagnosis-related group (DRG) established in accordance with paragraph (a) of subdivision (3) of
§ 2807-c. Diagnosis-related group, as defined in 10 N.Y.C.R.R. § 86-1.50 (a), is the classification
system used by the Medicare program under Title XVIII of the Social Security Act for purposes of
reimbursing hospitals under the Federal prospect payment, except for variations set forth in the
regulations of the Commissioner of Health.

It is not uncommon for workers' compensation, volunteer firefighter or volunteer ambulance worker
claimants to suffer spinal injuries. To treat these spinal injuries it is sometimes necessary to
perform spinal surgery and use in such surgery implantable hardware and instrumentation. The use of
the hardware and instrumentation results in higher costs that are not covered by the statutorily
required reimbursement methodology.

On August 16, 2006, bill A. 8840 / S. 5728 as Chapter 592 of the
Laws of 2006, which amended the Workers' Compensation Law regarding the reimbursement of general
hospitals for the use of implantable hardware and instrumentation in spinal surgeries, was enacted.. Specifically,
Workers' Compensation Law § 13 is amended by adding a new subdivision (a-1) to read as follows:

(a-1) Notwithstanding the provisions of subdivision four of section twenty-eight hundred
seven and subdivision one of section twenty-eight hundred seven-c of the public health law, payments
to general hospitals for AP-DRGs 755-758 (spinal fusion; back and neck procedures), 806-807 (combined
anterior and posterior spinal fusions), 836-837 (spinal procedures), and 864-865 (cervical spinal
fusion) shall be at the rates of payment determined pursuant to section twenty-eight hundred
seven-c of the public health law for state government agencies, excluding adjustments pursuant to
subdivision fourteen-f of such section twenty-eight hundred seven-c, plus the provider's documented
cost for any implantable hardware or instrumentation, which should be recorded under revenue code 278
on the claim, plus an additional ten percent of such documented cost not to exceed a maximum of three
hundred fifty dollars. (emphasis added).

In other words when procedures relating to the DRGs listed are performed, the general hospital is
to be reimbursed for the following: (a) the DRG; (b) the documented cost of the instrumentation and
hardware used in the surgery, and (c) 10% of the documented cost, not to exceed $350.00.

This bill was signed into law on August 16, 2006 and is scheduled to expire on March 31, 2011.
The new law not only had an immediate effective date, but, having become law after April 1, 2006, it
is "deemed to have been in full force and effect on and after April 1, 2006." Therefore, for any
procedures relating to the DRGs listed above and performed on and after April 1, 2006, the general
hospital is entitled to the increased reimbursements. General hospitals where such procedures were
performed may submit supplemental claims for the additional reimbursement. The additional
reimbursement may only be requested when the actual surgery was performed on or after April 1, 2006;
additional reimbursement is not available for surgeries performed prior to April 1, 2006.